If that model sounds a bit like Uber for the charter aircraft industry, you wouldn’t be the first to think so. “Other people and media out- lets have made the comparison to Uber, but we do not,” Rakic says. “Though we have certainly been inspired by these technology com- panies that have gone and disrupted industries by unlocking a lot of latent demand, we think there’s room for a lot of that same kind disruption in general aviation.” The concept from a cus- tomer’s perspective, as Rakic explains it, is simple. “As a traveler, without even creat- ing an account you can go to FlyOtto. com, enter an origin and destina- tion, and it will draw you a map and give you whatever options we have in our network,” Rakic says. “As we grow our national network, more and more options will be available, but, for example, if you wanted to fly from New York to Martha’s Vineyard, or San Francisco to Tahoe, there are already a ton of options. We’ll show you the options—including differ- ent aircraft from different operators, with the different costs and times for each—and let you configure a trip without even creating an ac- count. When you’re ready to create a trip, you create a traveler profile and give us a credit card number, and you won’t get billed until you book a trip. Once the trip is confirmed by the operator, that’s when the client is billed and the operator is paid.” It’s just as simple from an op- erator’s perspective: to join the network, operators flying charter in the U.S. under Part 135 of the Federal Air Regulations can visit Aviation Business Journal | 3rd Quarter 2016 Operators.FlyOtto.com. It’s free to join the network, and operators never pay directly to be included in the network for either OpenAirplane or FlyOtto. When a user books a charter trip or rents an airplane through the services, Rakics’s company pays the credit card transaction fees around 3 percent and keeps 7 percent. The operator keeps the remain- ing 90 percent of the transaction. “Operators agree to the profit mar- gins they need to be viable upfront,” Rakic explains. That info is fed into the algorithm that ultimately serves up trip options for the user. And, once a prime operator is identified for a customer, that operator is offered an exclusive opportunity to accept the trip. The algorithm automatically budgets for aircraft repositioning, FBO fees, segment fees and taxes. “All the operators in the FlyOtto network have agreed to come on board based on the pricing they’ve told us they want to be paid,” Rakic says. “It eliminates the race to the bottom created by the brokers, the competition between operators that can occur when a broker offers an opportunity to multiple operators for bids—a typical broker sends requests out to about five different operators, while we’re offering exclusivity—and the direct haggling with a user over the price. We’ll only send the request to the operator after the traveler has agreed to the price, meaning the operator will only hear from us if it works out at the rate they’ve already said they can be profitable at. We’ve already made the match and we’ve sent you the trip because you’re the one that’s best suited to Continued on page 23 21
